Coronavirus: Caffe Nero considers CVA as pandemic prolongs high street pain

Caffe Nero is considering an insolvency mechanism to restructure its financial liabilities as the coronavirus crisis continues to inflict pain on high street hospitality businesses.

Sky News has learnt that the chain, which is one of Britain's biggest coffee shop operators, is examining a company voluntary arrangement (CVA) as an option to reduce its rent bill and exit loss-making outlets.

The privately owned group has yet to make a final decision about a CVA, although sources say one is expected in the coming weeks.

Further details about the consequences of a CVA, including numbers of job losses or shop closures, were unclear on Friday.

Like rivals such as Pret A Manger, Caffe Nero has been heavily impacted by the reduced footfall in city centres as millions of Britons continue to work from home.

Insiders say Caffe Nero, which is working with KPMG on its options, is expected to seek steep rent cuts from landlords as part of any restructuring deal.

Britain's hospitality industry was offered some respite from the pandemic this week when Rishi Sunak, the chancellor, announced a more generous state subsidy package for workers' wages.

Sector chiefs warned, though, that the relief was likely to be only partial and temporary, with permanent changes to consumer behaviour still expected to herald significant redundancies.

Caffe Nero operates 660 stores across the UK, more than 90% of which have reopened since the original UK-wide lockdown ended in June.

The group, which is owned by Gerry Ford, is said to have been performing strongly prior to the COVID-19 crisis.

It employs about 5,000 people and says it serves 135 million customers annually.

A Caffe Nero spokesman declined to comment specifically on the potential for it to launch a CVA.

Last month, it said: "It has been a difficult period since lockdown measures were introduced by the government and we're working incredibly hard to navigate our way forward.

"As part of this, we are working closely with advisors to help review our options and assist with our ongoing negotiations with landlords."